ECJ: According to Advocate General Bot, creators of computer programs may oppose the resale of ‘used’ licences which allow their programs to be downloaded from the internet again

Oracle develops and markets computer software, in particular, by download from the internet, by concluding “licence” agreements with its customers, which provide that the customer receives a non-transferable user right, for internal business purposes and for an unlimited period.
UsedSoft is a German company which sells licences bought from Oracle customers. UsedSoft’s customers, who are not yet in possession of the Oracle software concerned, download the software directly from Oracle’s website after acquiring the ‘used’ licences. Customers who already have the software and who purchase licences for additional users download the software to the main memory of the workstations of those additional users.
Oracle having brought proceedings against UsedSoft before the German courts to prevent the continuation of these practices, the Bundesgerichtshof (Federal Supreme Court, Germany), which has final jurisdiction over this dispute, referred a question to the Court of Justice in order for it to interpret, in this context, the Directive on the legal protection of computer programs.1
That directive, which ensures the protection of computer programs by copyright as literary works, provides that the first sale in the EU of a copy of a program by the right holder or with his consent shall “exhaust” the right of distribution within the EU of that copy, with the exception of the right to control further rental of the program. Under this principle, the intellectual property right holder who has marketed a copy in the territory of a Member State loses the right to rely on his monopoly on exploitation in order to oppose the resale of that copy.
Whereas UsedSoft claimed that the principle of exhaustion validated the practice of reselling used computer software, Oracle contended, to the contrary, that the principle was not applicable in the event of the downloading of a computer program from the internet, in the absence of a sale of a tangible object.
According to the Advocate General, the principle of exhaustion applies where the right holder, who allowed that copy to be downloaded from the internet to a data carrier, also granted, for consideration, a right to use that copy for an unlimited period of time. Here to read more.